How the Public Hurts Health Care Reform

Lori Montgomery has a nice article on a perennial wonk dream: Funding health care, or even American government, through a Value Added Tax (more commonly known as a VAT, and best understood as a modified sales tax). This is how Europe funds its health care systems. This is how health policy expert Ezekiel Emmanuel, brother to Rahm and health care adviser to Orszag, would fund his ideal health care system. This is how tax policy expert Len Burman would fund his ideal health care system.

But Montgomery doesn't get too deep into the reason why a VAT won't be used to fund our health care system. The issue is not the VAT. It's the health care system. The central principle reformers is very simple: Let people keep what they have. That was the lesson learned in 1994. People want more options. But they don't want to be forced out of their current arrangements.

If you rebuilt health care financing around a single tax, you'd also have to rebuild health insurance offerings around what is, in effect, a single payer. That doesn't mean the insurance couldn't be private. But it couldn't be coming from hundreds of different sources. Employer-based insurance, for instance, only exists because employers pay for it. If the government were paying for it through a VAT, then that insurance would no longer be attached to employers. That would be a good thing because employer-based insurance is a bad thing. But it would also mean individuals would "lose" their current insurance (even though it would be instantly and seamlessly replaced). Which is why we won't have a VAT.

This, incidentally, is one of the health reform constraints people don't really like to talk about. You hear a lot about the malign influence of the health care industry, or the intransigence of Republican senators, or the difficulties posed by deficit hawks. Those constraints all have, for Democrats, easy villains. But a lot of very bad policy limits are the product of public preferences. And those are harder to attack, and thus harder to change.

The health care system is in extremely poor shape. That means, fairly logically, that it requires pretty extensive changes. But when it comes to health care, the public is afraid of too much change, too fast. There's a lot of status quo bias. Many wasteful and damaging inefficiencies -- like the financing system -- are left to fester because changing them would create too much disruption. The end result is that we're treating the health care system with anti-inflammatories and physical therapy when what it really needs is surgery. The reforms we're considering will make the system better. But they won't make it well.

Come on Ezra, this is a myth. It's really the standard defense against single payer -- "The public will not put up with a government run health insurance scheme." There is plenty of evidence that the American people hate our system and are ready for a change.

Look at the Commonwealth Fund study that came out last week. Here's another proof. The following is a question from a Post ABC national poll:

"Which would you prefer: the current health insurance system in the United States, in which most people get their health insurance from private employers, but some people have no insurance, OR, a universal health insurance program, in which everyone is covered under a program like Medicare that's run by the government and financed by taxpayers?"

The result - 62% for Medicare for All 33% for private insurance.

That's pretty decisive. And this is with the facts suppressed. Other questions in the poll show that the 62% supporting the universal program mostly believe it will cost more when it will cost less. They believe the won't be able to pick their doctor when Medicare allows much more freedom than most private plans. They believe there will be long waiting times when this is a myth. And still they support a universal plan like Medicare for all by 2 to 1.

Go read the comments from the Obama's health care parties.

The reason "You hear a lot about the malign influence of the health care industry, or the intransigence of Republican senators, or the difficulties posed by deficit hawks." is because they are true. Why are the basic facts about single payer kept from the public? The media including the Post simply refuses to consider them. Somebody is running a masterful PR campaign. Baucus received $1.5 million from the health industry in the last 5 years. Could that have possible affected his thinking?

Us single payer nuts don't claim Medicare for All will solve all the problems. But it will give time to work on them.

Not really, though, is it? The UK funds the NHS (ostensibly) out of National Insurance (the British equivalent of FICA) but also out of general taxation, which includes income tax and VAT. The French system uses a payroll deduction too.

Seriously, though, when Obama came to town, the line about not going to "government health care" fell flat. Someone near me said "it has to be better than what I've got now."

This is just untrue. The VAT is a harmonised system of sales tax, to remove competition or arbitrage opportunities between sales tax systems of the EU. Its only hypothecation is that a small part of it is dedicated to funding the EU.

The various member states then use a mixture of funding sources, including private contributions, as noted on this blog, to fund their health systems. The only connection with VAT is that it goes into their general budgets.